DCCI places suggestions to make budget business-friendly

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FE Report
The Dhaka Chamber of Commerce and Industry (DCCI) in a meeting Friday identified some positive and negative elements of the new budget, and placed a 17-point recommendation to make the budget more business and investment-friendly.
Chaired by DCCI president Zafar Osman, directors and concerned members of DCCI were present at the meeting.
The positive elements of the budget include tax rebate for old-aged people from 65 years, initiatives for institutionalisation through Public Private Partnership (PPP), enhancement of VAT exemption limit of turnover tax from Tk 2.4 million to Tk 4.0 million, reduction of import duty on basic raw materials, expanding social safety net and food security measures, increased use of ICT for implementing Digital Bangladesh, employment creation and emphasising SMEs, agricultural and rural development, zero duty on energy saving lights and solar panel, withdrawal of license fees for captive power generators, housing projects in the rural areas etc.
The negative elements of the budget include inclusion of RAB in the list of VAT-collecting organisations, enhanced rate of advanced trade vat (ATV) from 1.5 per cent to 2.25 per cent, making compulsory environmental clearance certificate for any industrial establishments, ambitious target of revenue, no plan for reform of administrative structure, high corporate rate, reduction of subsidies for farmers to Tk 36.00 billion, no increase of SME refinancing funds, no truncated VAT exemption facilities for SMEs, no budgetary provision for improving quality of education and quality of products, no provision for qualitative improvement of manpower etc.
In the recommendation, the DCCI said the budget has announced a target to create 7.7 million employment opportunities next year, which will require massive industrialisation. So, there is a need for immediate implementation of power and energy projects as well as full and timely implementation of ADP.
Besides, prices of diesel and furnace oil should be lowered. In case of diesel it should be lowered from Tk 44 to Tk 20, and furnace oil should be lowered from Tk 26 to Tk 10 only, as a large number of SMEs use diesel and furnace oil for their generators.
The DCCI said without appropriate distribution mechanism of food grain and ensuring social safety-net, food security may not be ensured. For increasing storage capacity no fund has been allocated. Crop storage financing facilities for growers has to be created.
It said ATV has been increased from 1.5 per cent to 2.25 per cent for all imported items. This will affect consumer products and contribute to price rise. So, ATV should be kept at least at the existing rate.
The DCCI said solar panel has been used along with other components like battery, charger etc. So VAT waiver should be allowed to all required components at the supply stage as package-basis. Allocation in the budget for solar energy is now being disbursed through IDCOL, distribution of funds for solar energy projects can also be made through commercial banks, which will help to initiate more and more solar projects.
The name of the RAB has been included in the list of agencies to assist VAT authority. The DCCI feels that there is no need for such inclusion in the said list, and also recommended automation of the whole process for collection of VAT and income tax.
It said the new budget has reduced corporate tax for mobile phone operators from 45 per cent to 35 per cent, subject to the condition that they are listed in the stock exchange. The DCCI has suggested that banks may also be given this benefit.
In the budget the government has announced 19.2 per debt-servicing liability, and proposed for Tk 205 billion public borrowing, which will have short and long run impact. It will squeeze the fund availability for the private sector, and debt-servicing liability will again be increased. So, the government should strengthen its effort on mobilisation of funds from external sources and capital market.
The DCCI said modalities and the legal framework for PPP should be evolved as soon as possible. Besides, tax net should be extended beyond metropolitan areas, it added.
The budget proposes to impose tax on private use of vehicles, depending on the engine capacity. It is an expenditure tax. As there is no scope for expenditure tax, it should be withdrawn.
The DCCI said the budget proposes inclusion of two new VAT forms for the price declaration of the traders and manufacturers, producing both exempted and exported goods as well as VATable goods. This form should be easy and simple.
The DCCI has requested the government to be more careful and stop leakage of budget information like this year.
Budget has proposed several SME development policies, but in case of assembling television and other assembling units, the imposition of tax is same for both commercial importers and industrial importers. There should be at least 20 per cent tax difference in favour of assembling industries.
Tax exemption limit for individual taxpayers should be increased, considering their present economic hardship.
For accelerating the implementation of ADP, local government management should be strengthened, the DCCI added.